At a time when so many companies were getting it wrong, Southwestern Energy was the little company that could. A decade ago the company faced what former CEO Harold Korell called “some of the darkest moments in our company history.” Formed as a gas distribution company in 1929, it moved into drilling for gas in the ’40s. However, by 1999, the company’s production was on a steady decline, and it had been hit with a US $109 million judgment in a class-action lawsuit (which it appealed and eventually lost in 2000).

Management took charge, tackling current challenges as well as framing a growth formula for the future. The results speak for themselves — in 2009 Southwestern was tagged by IHS Herold as its top “Pacesetter” company, in no short part because the company’s net worth soared from about $250 million to more than $16 billion at year-end, resulting in Southwestern being the number one performing stock of the decade among stocks in the S&P 500, as shareholders reaped a 5,776% return. At the heart of its success are a number of things, not the least of which is its astounding success in the Fayetteville shale. Recently appointed president and CEO, Steven Mueller, said that due to his company’s activities in that shale play, Southwestern is one of the few companies in the world to have drilled 1,000 wells in shales. “The learning we’ve been able to amass in our company sets us up for doing a lot of good things in the future, not just in the Fayetteville,” Mueller said.

icon, Steven Mueller, Southwestern Energy

At the helm of a company that has seen unprecedented growth in recent years, the president and CEO of Southwestern Energy talks about his company’s success in the Fayetteville and how that success will continue for decades to come.

Despite tough times, he added, the company has been able to keep the right people in place and has grown them to learn how to do well in shale plays.

The learning has been rapid — the Fayetteville started as a play concept in 2001. The company acquired its first leases in 2003 and placed its first well on production in September 2004. By July 2009, it was producing 1 Bcfd, and it has purchased firm capacity to more than double that number in 2012. Mueller added that his company did not really pioneer any new techniques or technologies during that time; it just kept getting a little better at what it was doing.

In addition to the Fayetteville, Southwestern is also active in the Marcellus and Haynesville shales, and now has access to explore on more than 2.5 million acres in New Brunswick, Canada. “We’re just trying to leverage those things we learned in the Fayetteville and then learn some more,” Mueller said. “Shales aren’t identical. You can transfer some of the knowledge, but you can’t transfer it all.”

Mueller, who has a degree in geologic engineering from the Colorado School of Mines and has previously worked for Tenneco Oil Co., Fina Oil Co., American Exploration Co., Belco Oil & Gas Corp., The Houston Exploration Co., and CDX Gas LLC, said his company’s influence will extend well beyond the next decade. “We don’t talk in terms of five or 10 years; we talk in terms of generations,” he said. “We literally will be in northern Arkansas on this one project for two generations. We’re not going to be dealing with the landowner who’s there today. We’ll be dealing with his great-grandkids.”

This is forcing the company to think in truly innovative ways about its data management strategy since it is likely that data that is being gathered today will need to be accessible to employees six decades from now. Given the likelihood that today’s accounting software will be a dinosaur by then, the company is working on data management strategies so that each new generation of software will not require complete inputting of older data.

“It’s an interesting problem, and it’s not one that you normally have to think about,” he said. “Normally, after 10 years, a typical field is depleted and you don’t worry about it. That’s not going to be the case in any of the shale plays, and certainly not in ours,” he said.

Finally, Mueller said, Southwestern does not look to its future in terms of growth rates or targets. It relies instead on “the formula,” expressed in algebraic terms, but effectively meaning that the right people doing the right things wisely investing cash flow from the underlying assets will produce value. “It’s worked,” he said. “It’s been in existence for 10 years. To some people, it may sound trite — well, of course you want the right people doing the right things — but because that formula was created in a very bleak time for our company, it has become a kind of rallying cry and also a language.

“That’s what drives us now and is going to drive us in the future.”